The Ambassador in Venezuela ( Corrigan ) to the Secretary of State

No. 8824

Sir: I have the honor to inform the Department that, although their tempers subsequently cooled off, when they left the Minister of Labor’s office the evening of May 30th after settling their workers’ demands, several of the oil company managers were exceedingly angry. Others felt that, instead of simply having been out-maneuvered by the Government and the Petroleum Federation negotiators, they had been swayed too greatly by their profit-fat colleagues. The latter, nervous from the start, were reportedly pretty badly frightened when the Minister of Labor69 at noon on the 20th threatened to impose a settlement by decree unless one were reached outwise before evening, at which time the Junta President was scheduled to deliver a report to the Nation on the accomplishments of the Junta to date.

The Junta President, knowing that the heads of Creole (with 1945 earnings of $94,000,000) and of Shell (with proportionately large earnings) felt vulnerable and would be much more amenable to suggestions, called them in several times during the course of negotiations. The two reported back to the industry upon each occasion, but failed to convince the others that they had been as firm as the situation warranted. The others therefore wanted to call upon the President as a body, and also contemplated a visit to the Embassy to solicit its assistance, but permitted themselves to be talked out of both ideas.

Early management conferences revealed that all companies were resigned to making the Bs. 2.00 per day extra wages paid since November 10, 1944 an integral part of salary. They were prepared to grant Sunday or rest day pay, to give up to 15 days annual vacation with pay, and to meet other various demands. There was unanimous agreement to refuse to surrender any of the prerogatives of management, including the right to hire and fire. The point which caused trouble was that of a basic wage increase. Creole and Shell were willing from the start to give Bs. 2.00 per day, half of what had been demanded. The remaining companies felt that since they had already agreed to a 16⅔ percent increase, in the form of Sunday pay, they should stand firm in refusing to increase the basic wage.

During the several days when negotiating committee sessions were suspended, first pending submission of the industry’s written reply to the demands, and later while the workers’ committee was studying this and preparing its counter-reply, union leaders constantly harped on [Page 1345] the possibility of a strike. This talk caused considerable tension in the industry, whose committee eventually was authorized to offer 1 bolivar per day basic wage increase. The workers’ group pretended that this was not enough, but offered to postpone for two days the filing of the 5-day strike notice announced for May 30th, this in order to give the industry a “last opportunity” to better its offer.

At noon on May 30th the Minister of Labor called in the Creole and Shell heads and told them they would have to give Bs. 2.00. If they refused, settlement would be imposed by decree. The two company heads then went to see Betancourt, to be told that settlement was no longer an industrial matter but had become a political one, and he wanted them to persuade the industry to give the Bs. 2.00 so that he could announce the settlement during his speech that evening.

When report was made to the other managers the discussion is understood to have become pretty warm. However, rather than precipitate a strike, which might very well lead to the outbreak of civil strife, the industry negotiators were told to go back, try to settle for the 1 bolivar increase, but go to Bs. 2.00 if absolutely necessary. At this last meeting the workers’ representatives won, and they and the Junta President announced the successful settlement with high glee.

The industry subsequently began a draft of the collective contract. This will be delivered to the workers’ committee today, and probably will be ready for signature before the end of this week, after some jockeying about language. The workers’ committee no doubt will want to keep the language ambiguous, with an eye to extracting additional advantage, while the industry committee will insist upon clarity in order to avoid pyramiding of the additional payments it is called upon to make.

Creole’s policy in the past has been to go its own way, and avoid industrywide agreements. It wanted to act alone this time, but in the light of special circumstances agreed to go along with the rest of the industry. Some of the other companies would have welcomed a showdown at the start, when the exaggerated demands were presented. Later, after negotiations had begun and they found that Creole and Shell were prepared to “give” on practically everything, except management rights, a showdown was again suggested. Some felt that, precisely because the political situation is what it is, a less costly settlement could have been obtained. Nevertheless, while they still resent the fact that when the Creole and Shell heads went to see the President the two failed to suggest that a more representative group be invited, and while they feel that their “fat” colleagues could have done a much better job, the passage of even only a few days has been sufficient to cool tempers and give a different perspective.

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There is general recognition on the part of the entire industry, even the profit-fat companies, that the additional burden of the present settlement is about as heavy as it can stand; and, realizing that they have been absurdly remiss in the matter, are now talking about instituting a discreet campaign to educate the public appropriately. Most matters are judged by the present de facto Government in the light of political expediency. By pounding away at economic and other pertinent facts the industry hopes the atmosphere may be improved when the time comes toward the end of 1947 for further industry-labor discussions. Whether this happens or not, the prospect of 19 months of industrial peace, when labor everywhere, particularly in the United States, is so restless, is some consolation.

Respectfully yours,

For the Ambassador,
Thomas J. Maleady

First Secretary
  1. Raul Leoni.